A Navigation Error Caused a Cargo Ship to Run Aground

question 8

Multiple Choice

A navigation error caused a cargo ship to run aground on a reef.The ship,valued at $1.5 million,was carrying $1.5 million in grain and $1.5 in electronic devices.The ship sustained $150,000 in physical damage.If this loss is a "particular average" loss,how will the loss be settled?

• A)the owners of each of the three interests are responsible for $50,000
• B)the owner of the ship is responsible for the entire $150,000 loss
• C)the two cargo owners are each responsible for $75,000 of the loss
• D)the owner of the ship is responsible for the first $100,000 of the loss,and the two cargo owners are each responsible for $25,000 of the loss

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Definitions:

Internal Rate of Return

A financial metric used to estimate the profitability of potential investments, representing the discount rate that makes the net present value of all cash flows equal to zero.

Managers

Individuals responsible for directing and overseeing the operations and strategic direction of a company or organization.

Practice

The repeated exercise or application of an activity or skill to acquire or maintain proficiency in it.

NPV

Net Present Value, a calculation used to determine the current value of a series of future cash flows.